The Education Department continues to struggle with application backlogs across a variety of repayment and student loan forgiveness programs, including income-driven repayment plans. But things may be about to get a whole lot worse for borrowers with student loans enrolled in the SAVE plan.
Last month, the department and Secretary of Education Linda McMahon announced a settlement agreement with a group of states that had filed a lawsuit challenging the SAVE plan, a Biden-era IDR option that offered lower monthly payments, interest relief, and fast-tracked student loan forgiveness. The SAVE plan has been blocked since 2024 after a federal appeals court issued a nationwide injunction suspending the program while the litigation continued, forcing millions of borrowers into an involuntary administrative forbearance. The proposed settlement, which is now pending court approval, would formally eliminate the SAVE plan and force borrowers with student loans enrolled in the program to switch to a different repayment plan.
While the department has made meaningful progress in reducing a long-running IDR application backlog, there will likely be a new surge of IDR applications once the SAVE plan is officially gone and borrowers are forced to choose a different plan. This influx of new applications may be unlike anything the department has experienced before. And at the current rate of processing, it could lead to massive delays that would make the recent IDR backlog seem insignificant by comparison. Here’s a breakdown.
SAVE Plan Borrowers Will Need To Move Their Student Loans To Other Repayment Plans
Under the pending settlement agreement, the Education Department would end the SAVE plan. The estimated seven million borrowers with student loans enrolled in the program who have been in a forbearance since the summer of 2024 would then be forced, en masse, to select a different repayment plan.
“On Dec. 9, 2025, the U.S. Department of Education (ED) announced a proposed settlement agreement with the state of Missouri that would end the Saving on a Valuable Education (SAVE) Plan,” says online Education Department guidance that was updated last month. “As part of the proposed settlement agreement, which is pending court approval, ED would not enroll any new borrowers in the SAVE Plan, deny any pending SAVE applications, and move all SAVE borrowers into available repayment plans.”
“Under the settlement, the Department agrees to work to move all of the borrowers currently in the SAVE plan out and into a different repayment plan,” confirmed the National Consumer Law Center in a blog post in December. “The settlement does not say how soon borrowers will have to move out of the SAVE plan. In its press release, the Department of Education said that borrowers in SAVE will have ‘a limited time’ to select a new repayment plan. The Department has not said what repayment plan the Department will move borrowers into if they do not select a new repayment plan.”
Some student loan borrower advocates are concerned that the department may force borrowers into a Standard repayment plan (which is not based on a borrower’s income or their ability to afford the payments) if they do not affirmatively apply to switch to a different plan, like one of the other IDR options such as IBR, ICR or PAYE. A new IDR plan called the Repayment Assistance Plan, or RAP, is expected to launch later in 2026.
Surge In New IDR Applications Could Cause Massive Backlogs For Student Loans
A massive surge in new IDR applications submitted by the roughly seven million borrowers with student loans currently in the SAVE plan could lead to unprecedented backlogs and processing delays.
The Education Department has made substantial progress in reducing an IDR application backlog over the last year that was partially the result of the department temporarily shutting down all IDR processing in response to court orders associated with the SAVE plan litigation. According to new data the department released last week, the backlog of pending IDR application now stands at a little over 734,000. That is still a sizable backlog, although it is a significant reduction from the nearly two million IDR applications that were pending earlier last year after the IDR application system shutdown.
But these figures may be dwarfed by the anticipated influx of new applications when SAVE plan borrowers are forced to move their student loans to other IDR plans. This will be particularly problematic if the Education Department threatens to automatically switch SAVE plan borrowers to the Standard plan, which would effectively compel many of these borrowers to affirmatively apply to switch to either IBR, PAYE, or ICR (or RAP, if it is available) if they want to maintain access to affordable payments. So far, the department has not indicated how it plans to “move” borrowers to other repayment plans.
According to last weeks’s data update, the department processed just over 277,000 IDR applications during the previous month. If the IDR application backlog balloons to around seven million after the department begins forcing SAVE plan borrowers to move their student loans to other plans, it could take the department and its contracted student loan servicers 25 months (longer than two years) to get through those requests at the current rate of processing. And that assumes that no additional IDR applications are submitted during that time, and that the current backlog is cleared before the SAVE plan-related surge of new requests begins, both of which are unrealistic expectations.
What Borrowers With SAVE Plan Student Loans Can Do
Borrowers with student loans in the SAVE plan forbearance may want to consider applying to switch to a different IDR plan now or soon, before the Education Department begins implementing the settlement and forcing borrowers to switch plans, particularly if they want to resume making progress toward eventual student loan forgiveness under IDR plans or PSLF. Applying soon may allow borrowers to avoid a potentially catastrophic backlog. But monthly payments under the other IDR options will almost universally be higher than under the SAVE plan.
“Borrowers who want to continue making progress in IDR or PSLF should consider switching to a different IDR plan, such as IBR, where they can continue earning credit toward IDR or PSLF cancellation,” says the National Consumer Law Center in the December blog post. “If you can’t afford payments in another plan right now, or need to focus your money on another financial goal (such as paying off a higher interest debt), then it might be fine to leave your loan in the SAVE forbearance for now. Just realize that you might not have much longer before you are forced out of SAVE and into another plan where you’ll have to make payments again. And if you don’t request to switch plans and the Department forces you out of SAVE, it may not switch you to the best plan for you.”
The Education Department indicates that borrowers applying to switch their student loans from the SAVE plan to other IDR plans may experience faster processing if they apply online and consent to using an IRS data retrieval tool that automatically imports their income information from their tax return. Even with the current IDR application backlog, this automated system may allow for comparatively faster processing than manually submitting income documentation, such as a paystub or employer letter. That, in turn, may help SAVE plan borrowers get back on track for student loan forgiveness under IDR plans and PSLF relatively more quickly.
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